How to Rebuild Credit After a Bankruptcy
September 23, 2019
A good Colorado bankruptcy attorney can assist you with this process.
A primary goal of a lot of clients is to rebuild their credit. A good Colorado bankruptcy attorney can assist you with this process. Often the first step to rebuilding something is to first demolish what is already there. A bankruptcy will accomplish that task and then it must serve as the foundation on which to rebuild your credit. So how do you go about rebuilding your credit into something strong.
First, a month or so after you receive your bankruptcy discharge, check your credit. If the credit report is not reporting debts accurately you may need to file a dispute with the credit report. This needs to be done in writing and send a copy of the bankruptcy discharge and the schedule showing the debt as listed in the bankruptcy proceeding.
Unfortunately, to build a credit score you generally have to take credit. A lot of folks are not eager to take on new debt immediately after a bankruptcy. However, there are ways to manage your debt and afterall, you are starting with a clean slate.
The first thing to know is that despite the fact that you have just filed a bankruptcy, there will be lots of people who will offer you credit. Creditors actually track the federal bankruptcy database so they can target people who have recently filed bankruptcy. They think you will be desperate for credit so they offer high interest. In other words, you will be flooded with offers, meaning you can pick and choose. Wait for a reasonable offer and then go for it.
I usually recommend a low limit credit card ($250-$500 limit). Then charge it for a purchase and make timely payments. I would not pay the card off completely each month because then there is no balance for the creditor to report to the credit bureau. But keep the balance low to minimize the interest. You could also look into secured credit card.
Another thing to do can be to get a car. However, this is not a good idea in all cases and it may be a good idea to inquire with a Colorado bankruptcy attorney. However, in the cases where this does work you can get a used car (around $10,000 to $15,000). Remember, you just went through a bankruptcy so you need to be particular with the transaction to minimize your exposure to making a bad deal. So research the car, make sure it is reliable, keep the monthly payment reasonable (I like $300 or less), keep the term short (no more than 4 years), and finally work with a reputable dealer. Finance the car and make timely payments and your credit score will reflect that as a big positive.
Finally, some banks will offer small loans for people trying to build or rebuild their credit. So feel free to inquire with your banker or Colorado bankruptcy attorney about such programs.
Rebuilding your credit is a process that takes time. A high credit score typically takes years to build. So start small and build on it. Keep your head up and scrutinize your transactions to make sure you are setting yourself up for success.
Denver Bankruptcy Law Office Nathaniel Thompson
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